With 20 lakh young professionals joining the salaried group every year, alternate lending startup CASHe is building a business providing this hitherto ignored group the access to small loans.Chhavi Tyagi | ET Online | August 21, 2017, 14:02 IST

When you are a startup which lends to borrowers with no credit history or at best, a subpar credit rating, how do you judge their repaying capability? In the age of social media, where your social existence is as 'real' as other facets of your life, alternate lending startups are depending on social media activities to define a person's credit worthiness.

Founded in 2016, CASHe makes use of the extensive data generated by a user on social media platforms to judge their credit worthiness in order to extend loans.

"How do I rate someone as good or bad without having their credit information? I need other proxies. My other proxies are primarily their mobile usage, number of contacts on their phones, kind of apps they use, frequency of using ecommerce website, etc. All this is done by a complex algorithm which evaluates about a hundred data points, judging your interaction with your community," informs V Raman Kumar, founder of CASHe.

How to apply?CASHe is an app-only platform available at Google Play Store and Apple store which dispenses loans in a simple five-stage process. The loans are made available through an NBFC called One Capital.

After you download the app on your mobile phone, you need to register through your social profiles on Facebook, Google+, or LinkedIn, fill your application form which requires four basic documents, pick your loan amount depending on your eligibility, and receive the amount in your bank account. The repayment option is either through bank transfers or cheque.

"We are the only pure app-based company at this point. We have no physical validation. No one is checking documents, no one takes a borrower's signature, and the whole process is completed on the app itself," says Kumar.

The targeted user is between 24 to 34 years of age and the loan amount varies anywhere between Rs 5,000 to Rs 1 lakh, with the longest repayment period allowed is about six months.

"The entire process takes place in under seven minutes for 49% of our clients and for the rest, if we require any additional information we get in touch and get those documents, which is again done through our app," claims Kumar.

Why chase the unrated?Traditional financial institutions like banks lend exclusively to borrowers with a credit score generated by the likes of CIBIL and Experian. Among other things, this score is generated after evaluating a borrower's loans, including credit cards. Most banks lend only to borrowers with a high credit score. This leaves out a large majority of people who either do not have a high credit score or sometimes, no credit history. This is the gap that Kumar's CASHe wants to fulfil.

"Most financial institutions provide loans to people who have a score upwards of 750. Now, there are a lot of people who are below that score. This does not mean they are bad borrowers; it just means that they have not yet come in to the credit system. We service those borrowers who have a score of 550 to 750 and therefore, are incapable of taking a loan from a bank," says Kumar.

Kumar informs that this number is as big as 80 lakh to a crore and mostly includes young professionals. Moreover, every year 20 lakh more gets added to this underserved category.

"When a young professional gets into the system, they usually get a salary of Rs 4 to Rs 12 lakh per annum. The bank provides them with a debit card, but no credit cards. And, even if they get a credit card the limits are very low. Neither can he apply for a long-term loan because of the extensive documentation required. We are extending a credit line to these people," says Kumar.

The company recently raised $3.8 million from a bunch of investors led by former head of India at Blackstone, Matthew Cyriac -- the first investment CASHe received from outside sources. Kumar informs that the company is also in talks with and other other NBFCs for getting a credit line established. Kumar claims that the startup is registering a growth rate of 15% month on month.

"CASHe is the fastest growing company in this segment and has the biggest loan book at this point in time," claims Kumar.

Don't fret if you are 'anti-social'However, the startup does not shut doors on those who are not social media enthusiasts. There are plans afoot in which the company will release a tutorial on its website to educate potential borrowers on how to get their rating up to acceptable levels.

"We have actually provided loans to people with no credit rating or those who have a rating of 100-200. However, they have been with us for about a year now. And meanwhile their rating went up to 850. We are a platform which is preparing borrowers to smarten up their credit, get a better score, and get into a habit of taking money and paying back the money," says Kumar.

The future plan is to build a digital bank, says Kumar. Buffing up the client list to half a million is the first step.

"The current number of people in my system is 25,000 players, out of which 70% are frequent. I have plans to expand this base to 1 lakh by the end of this financial year. And, this is still a very small number compared to the people who are out there. So, the market is huge and the only thing that can stop us from growing is our balance sheet," says Kumar. The company, says Kumar, adds 4,000 new borrowers every month.